Final_JA_Cadence_9_Feb_16_Redacted.pdf

DMEA#16-01

Defense Microelectronics Activity 4234 54th Street, McClellan, CA 95652

SOW #16-6A3

Justification and Approval for Other Than Full and Open Competition

1. Agency and Contracting Activity:

Office of Secretary of Defense, Defense Microelectronics Activity (DMEA).

2. Nature/Description of Action:

This is a new contract for Cadence Software Maintenance for a base year and one option year, to be acquired on a Firm Fixed Price basis using RDT&E Funds. The value of this procurement is estimated to be $432,440.00.

3. Description of Supplies/Services:

DMEA requires Computer Aided Design (CAD) software tools in order to design and verify integrated circuits. CAD software companies have created design flow tools called Electronic Design Automation (EDA) that integrate different CAD tools into a single environment to support all steps of integrated circuit design and verification. DMEA uses the Cadence Design Environment EDA to develop custom process design kits (PDK), device modeling, and to support different fabrication technologies.

DMEA has a perpetual lease for twenty-one Cadence design flow CAD software tools, as listed in the table below:

CADENCE CAD software tools used by DMEA

Product Number Product Qty 38500 Virtuoso Spectre Simulator 2 21400 Virtuoso Schematic Editor Verilog Interface 2 71520 Diva Physical Verification and Extraction Suite 1 38520 Virtuoso Spectre-RF Option 1 72120 Assura Layout Vs. Schematic Verifier 1 900 Cadence SKILL Development Environment 1

95100 Virtuoso Schematic Editor L 2 95300 Virtuoso Layout Suite L 4 95200 Virtuoso Analog Design Environment L 1 95310 Virtuoso Layout Suite XL 2 72110 Assura Design Rule Checker 1 72140 Assura Graphical User Interface Option 1 95100 Virtuoso Schematic Editor L 1 95210 Virtuoso Analog Design Environment XL 1

Most viable software is subject to change. Maintenance updates the software modules to adapt to changes in the software environment, add functional enhancements, diagnose and fixes errors, and increase software functionality and maintainability over a much longer period of time.

Because designing and verifying integrated circuits is a fundamental DMEA mission, DMEA has a need to continually maintain and to provide user support services for its CAD EDA.

4. Authority Cited:

FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements, modified under the authority of 41 U.S.C. 1901, Simplified Acquisition Procedures (FAR Part 13.5).

5. Reason for Authority Cited:

Cadence Design Systems, Inc. is the only responsible source that can provide software maintenance and user support services for the twenty-one Cadence design flow CAD software tools.

Cadence Design Systems, Inc. is the source of the twenty-one Cadence design flow CAD software tools. CAD software designed by Cadence Design Systems contains proprietary scripting support language. This scripting language interprets and automates the execution of tasks throughout the design flow process. Because Cadence Design Systems does not authorize other sources to have access to this scripting support language, only Cadence Design Systems can properly perform software maintenance on the twenty-one Cadence CAD software tools.

Software maintenance from another source could introduce foreign, potentially non-compatible source programming language into the EDA. Cadence Design Systems would not be able to offer an adequate level of technical support for an EDA containing foreign CAD software. Lack of adequate technical support for the integrated circuit design flow process will create a significant technical risk.

6. Efforts to Obtain Competition:

On 24 November 2015, Matthew Duane, Contract Specialist, DMEA/MEEC posted a Sources Sought notice on www.fbo.gov with a closing date of 7 December 2015 to seek more competition for the maintenance and user service requirement. The contract specialist received no responses to the Sources Sought. This Justification & Approval (J&A) will be posted on www.fbo.gov.

7. Contracting Officer’s Fair and Reasonable Cost Determination:

As stated in FAR 13.106-3(a), before making award, the contracting officer must determine that the proposed price is fair and reasonable. The contracting officer will perform price analysis on Cadence’s quote in accordance with FAR 13.106-3(2).

Typed Name: Connie Newell Date:

Title: Contracting Officer Signature:

http://www.fbo.gov/

8. Market Research:

Cadence generates revenue primarily from licensing and providing maintenance for its software.

In the latest Annual Report filed with the Securities and Exchange Commission, Cadence stated that future revenue is dependent upon its installed customer base continuing to license products and purchase additional services. The data in table below shows how the product and maintenance services revenue as a percentage of Cadence’s total revenue has been increasing.

Fiscal Year Product and Maintenance Percentage of Total Revenue 2012 91% 2013 93% 2014 94%

A Justification for Other Than Full and Open Competition posted on FBO.gov by a NASA Contracting Officer states Synopsys, Inc., a direct competitor of Cadence Design Systems, confirmed on 16 January 2015 that only Cadence could provide software maintenance services for Cadence EDA CAD software.

Based on this market research, Cadence Design Systems, Inc. is the only responsible source that can provide software maintenance and user support services for the twenty-one Cadence design flow CAD software tools.

9. Other Facts:

Because the Cadence Design Suite is broadly used in the integrated circuit manufacturing industry to develop PDKs, by DOD Trusted Suppliers, like Harris Semiconductor and IBM, DMEA needs to have properly maintained Cadence Design Suite software.

10. Listing of Sources:

Cadence Design Systems, Inc.

2655 Seely Avenue San Jose, CA 95134 POC: Don Mausali (V): 408-428-5752

11. Actions to Increase Competition:

DMEA will continue to conduct market research to discover if another source can perform maintenance on Cadence software.

12. Technical or Requirements Certification:

I certify that the supporting data under my cognizance, which are included in the justification, are accurate and complete to the best of my knowledge and belief.

Typed Name: Vilaysack Savengveska Date: 8 February 2016

Title: Senior Design Engineer Signature: